Hi, I am new to these forums and to the stock market in general.
But I am curious to how exactly a stock price is determined by the exchange on a secondary market. I tried looking around a bit on the forum and on google, but couldn't come up with a conclusive answer.
What I've been able to gather so far is that the price is determined by the maximum amount of shares that have been sold for a particular asking price.
So let's say the previous price of a share was 10$ and now there have been 10 sellers asking 11$ per share and 10 sellers asking 12$ per share. There were 10 buyers for the 11$ per share and only 3 buyers for the 12$ per share, therefor the share price has increased to 11$.
But if that's the case, then that must be over a specific pre-determined time frame? Also, the following scenario seems odd:
there are 20 shares sold for 12$ and 19 shares sold for 25$, this wouldn't have an effect if the only thing that matters is the maximum number of shares sold for a particular price.
Also, do different exchanges have different ways of calculating price?
My apologies if there is somewhere a sticky on this or if it is a commonly asked question. Thanks in advance for any help.
But I am curious to how exactly a stock price is determined by the exchange on a secondary market. I tried looking around a bit on the forum and on google, but couldn't come up with a conclusive answer.
What I've been able to gather so far is that the price is determined by the maximum amount of shares that have been sold for a particular asking price.
So let's say the previous price of a share was 10$ and now there have been 10 sellers asking 11$ per share and 10 sellers asking 12$ per share. There were 10 buyers for the 11$ per share and only 3 buyers for the 12$ per share, therefor the share price has increased to 11$.
But if that's the case, then that must be over a specific pre-determined time frame? Also, the following scenario seems odd:
there are 20 shares sold for 12$ and 19 shares sold for 25$, this wouldn't have an effect if the only thing that matters is the maximum number of shares sold for a particular price.
Also, do different exchanges have different ways of calculating price?
My apologies if there is somewhere a sticky on this or if it is a commonly asked question. Thanks in advance for any help.
calculation of stock price
